Halifax reports 1.7% fall in house prices

Halifax has reported a 1.7% drop in the average price of a UK home, during April.

The decline takes the annual fall to 17.7% and puts the average cost of a property at £154,716 or £33,264 less than a year ago.

The lender is pessimistic in the short-term, with chief economist Martin Ellis warning that rising unemployment, low consumer confidence and a shortage of credit are likely to lead to further price falls in the months ahead.

At best the market will stabilise and there are already signs that this is happening, with new mortgage approvals rising for two consecutive months (4% in March and 17% in February) and more potential buyers registering with estate agents.

In addition, affordability has improved dramatically since the onset of the credit crisis, with the house price to earnings ratio falling to 4.26 in April, its lowest level since September 2002.

While this is good news for potential first-time buyers, lenders’ demands for high deposits and a “wait and see” approach on behalf of potential purchasers are still preventing a surge in new entrants to the property market.

Last week, Nationwide’s published its house price index showing a 0.4% fall in the average price of a home in April; according to the building society, the average domestic residence is now worth 15% less than a year ago, at £151,861.

Meanwhile, the Centre for Economics and Business Research (CEBR) is predicting that UK house prices will fall by 28% from their 2007 peak, before the downturn ends.

According to the think-tank, the market will bottom out early next year, having lost a further 8%.

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